Conversion of residential into commercial property

Growing up, the tales from children that stayed in the likes of Muyenga, Kololo, and Bugolobi were amazing. It was all about the finesse and spark that the places held, the kind that those living in the suburbs only dreamed of.

However, years down the road, these are no longer family places but hold towering buildings for offices.

The thought of this is akin to knowing that Shimoni was replaced by Kingdom Kampala. Speak of nostalgia because of how much change surrounds us.

A few years ago, a top lawyer could have an office at Nkrumah Road, and Luwum Street on Kampala Road or on Conrad Plaza on Entebbe Road. However, currently, Conrad Plaza has a taxi stage to Entebbe next to it thus dropping its value.

Dennis Jjuuko, a real estate consultants says that this means lawyers must move to places such as Kololo, Nakasero or Bugolobi.

“For example, MMAKS was previously housed at Diamond Trust building but is now in Bugolobi because that is the place that matches the level of their clients. If you are to insist to stay at the likes of Conrad Plaza, you must be the sole source of something one needs for them to come your way,” he says.

These changes definitely have a ripple effect to all these areas and have put pressure on landlords to upscale because people need a place that is easy to access and has parking for its clients.

Moses Lutalo, the managing director of Broll Uganda, says from a physical and urban planning perspective, this shift is a natural phenomenon owing to competition, dominance, and evasion that causes certain land users to start competing with other users hence some getting pushed out.

“Looking at how the Central Business District (CBD) is expanding hence pressure on the infrastructure, whereas Kololo was predominantly a residential, high-end, and lower density place, it is also pushing residentials out. That means we have to look for new low density high end residential neighbourhoods. That is why places such as Lubowa are coming up,” he says.

Security
 A few years back, there were some embassy offices around Parliamentary Avenue, and British Council was at Rwenzori Courts. Jjuuko says these have since moved because of security among other reasons. For instance, British Council is deeper in Nakasero while UNICEF is almost moving to Mbuya from behind CPS.

Need for value
Two incidences play out here with the first being that property values in these areas near the CBD have risen thus an opportunity for the owners to sell and go to live 15km outside town such as in Kira.

Another incidence is where a family of say, seven children have inheritance in an affluent place see better proceeds from selling than renting it out to get something tangible which they can invest elsewhere should they wish to.

“Either way, those that buy such property will have to part with a lot that they cannot put up a residential house as it will not make as much money to recover the huge sums sunk in. The only way is to go commercial because one is looking at making more money out of their investment,” Jjuuko says.

Sharon Kamayanji, the head of commercial at Knight Frank, adds that there are also restaurants taking up these spaces because the market is growing and the residential ares are becoming more difficult to rent out as residential property.

She attributes that to the noise pollution from an increasing population of bars, inconveniences such as traffic jam (synonymous with residentials turned commercial in Nakasero).

Change in office space taste
Previously, most offices were found in Nakasero but this has since changed to take up Bugoloobi, Ntinda. Therefore, Kamayanji says clients are continually seeking as well as leaving spaces.

“Those that are taking up stand-alone spaces are looking for something that offers more privacy, and greenery as opposed to brick and mortar. As such, some are leaving the typical office building to residential looking spaces,” she says.

Nature of business
The move by companies to go to residential areas is also engineered by the business nature.

“Businesses that need quiet locations, those that render services to people in areas such as day care centres. Construction companies, and consultancies may also prefer these areas because they do not need the clients to come to them, it is the reverse. So they have the flexibility to choose a laid back location,” Kamayanji says.

Pay off a loan
Lucy Kaitesi of the commercial division of Knight Frank says some sell because they have mortgages on the property or other pressing loan facilities.

“That way, the money got from the sale will settle the loan facility while the rest is used to buy another home,” she says.

Some have seen an alternative investment they would like to buy into such as a block of apartments hence sell so as to acquire it.

Future
Lutalo says this trend is expected as long as there is urbanisation. “If the rate is at 3.2 percent or 3.5 percent, the pressure on the infrastructure and its existing usage will spill over. As more people come to urban centres, they are looking for places to stay and work,” he says.

The end of it is also not in sight unless there is a deliberate effort to zone out areas for residential and commercial or mixed occupation. For instance, Nakasero was formally residential but has now been re-gazetted to commercial by KCCA and Kololo is following suit.

So the question is that where will the ambassadors and those in diplomatic missions go?
Lutalo says the solution is to look for a new urban neighbourhood that is well planned such as Lubowa where conversion as is seen in the likes of Nakasero is not expected.

“The master plan of Lubowa is very deliberate where although it is mixed use (live, work, play), the different areas; residential and commercial are clearly demarcated. However, that was not the case for the likes of Kololo because KCCA does not control people’s land. So everyone is looking at how best they can utilise their land. As such, one will put up an apartment next to a diplomatic residence.”

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